INTERNATIONAL PAPER COMPANY MANAGEMENT INCENTIVE PLAN (MIP)

Exhibit 10.1

INTERNATIONAL PAPER COMPANY

MANAGEMENT INCENTIVE PLAN (MIP)

Amended and Restated as of January 1, 2007

The purposes of this Management Incentive Plan, amended and restated as of January 1, 2007 (the “Plan”) are to: (a) provide an incentive for Participants to exert their best efforts to improve the financial performance of the Company; (b) attract and retain the best talent available; and (c) further align the interests of the Participants and International Paper’s shareowners.

The Plan is an annual cash incentive plan developed around the achievement of pre-established Performance Objectives and funded based on the Company’s achievement level against those Performance Objectives.

“Award Scale” means the conversion of the Performance Objective Rating to a percent of Target Award earned.

“Business” means a business segment that reports to a senior vice president of the Company.

“Committee” means the Management Development and Compensation Committee of the Company’s Board of Directors.

“Company” means International Paper Company, a New York corporation, together with its Subsidiaries.

“Cost of Capital” is the weighted average of the cost of equity and the cost of debt of the Company.

“Employee” means a regular, full-time employee of the Company.

“Free Cash Flow” means cash flow from operations less (i) capital spending and (ii) cash dividends.

“Participant” means a person who has been designated as a participant in the Plan, according to Section V.

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“Performance Objective Rating” means the percentage amount assigned to a Performance Objective for a level of achievement that translates to a percentage of the Target Award.

“Performance Objectives” mean the measures identified by the Company and approved by the Committee identified in Section VI of this Plan.

“Plan” or “MIP” means this Management Incentive Plan, amended and restated as of January 1, 2007.

“Plan Year” means the twelve month period corresponding to the Company’s fiscal year (January 1 through December 31).

“Return on Investment” or “ROI” means after-tax operating earnings, including both earnings from continuing and discontinued operations (up through the date of sale), and before the impact of special items divided by average capital employed. Capital employed is total assets, less short-term, non-interest-bearing liabilities. The Company’s ROI metric excludes the impact of special items, such as gains or losses associated with asset sales, restructing costs, changes in pension funding, and significant out-of-period or “one-off” items.

“ROI Peer Group” means those companies in comparable industry or business segments against which the Company competes, as determined from time to time by the Company and approved by the Committee. The ROI Peer Group will be recorded in Appendix A to the Plan, as amended from time to time as appropriate.

“Subsidiary” means any company that is owned (50% or more) or controlled by the Company, directly or indirectly.

“Target Award” means an amount equal to the percentage of salary range midpoint applicable to the actual position level of each Participant, shown in Appendix B.

The Chief Executive Officer may designate a portion of the MIP award pool to fund special awards for extraordinary individual performance to award to Employees regardless of whether such Employees are otherwise eligible to participate in the Plan.

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The Plan operates at the discretion of the Committee. The Committee may exercise considerable discretion and judgment in interpreting the Plan, and adopting, from time to time, rules and regulations that govern the administration of the Plan.

The Committee has delegated authority to the Chairman and Chief Executive Officer or his designee for the day-to-day administration of the Plan, except with respect to a Participant designated as senior vice president of the Company or higher.

Decisions of the Committee are final, conclusive and binding on all parties, including the Company, its shareowners, and employees.

Participants in the Plan are limited to Employees of the Company whose position level is 14 or higher. Except as set forth in Section VII(C), Participants must be actively employed on a full-time basis during the Plan Year and on the date of the award payout.

Employees who are eligible for participation in any other short-term, cash-based incentive compensation plan of the Company are not eligible for participation in this Plan.

An Employee who becomes eligible to participate in the Plan during the Plan Year or who moves from one eligible position level to another will be eligible for a prorated award.

Participation in this Plan, or receipt of an award under this Plan, does not give a Participant or Employee any right to a subsequent award, nor any right to continued employment by the Company for any period.

A. Performance Objectives – Funding the MIP Award Pool

The Company must achieve at least a minimum level of performance in order to fund the MIP award pool. If the Company does not achieve the minimum performance in at least one of the performance metrics, no MIP award pool is established.

The total MIP award pool will be determined based on achievement of the following Performance Objectives during the Plan Year. If the Company achieves its Cost of Capital during the Plan Year, an additional 50% will be added to the award as set forth below.

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B. Business Objectives

Business objectives should be in alignment with the financial and non-financial objectives of the Company. Business objectives are established by the Business unit and approved by the Chief Executive Officer, and are weighted 50% for Business unit awards.

Non-financial objectives should include specific goals under both Diversity and Global Employee Survey, weighted as appropriate for the specific Business, but not to exceed 20% of the overall Business award.

The Business performance achievement percentage may be modified by the Chief Executive Officer to ensure that the overall MIP award pool is not exceeded.

C. Performance Objective Rating

Each Performance Objective will be evaluated at the end of the Plan Year to determine the level at which the Performance Objective was achieved. The Company’s determination of performance achievement is presented to the Committee for its review and approval.

Business unit performance achievement will be assigned by appropriate Business unit management for final review and approval by the Chief Executive Officer.

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D. Approval by the Committee of the Total MIP Award Pool

The Committee approves the total MIP award pool based on the Company’s performance achievement against the Performance Objectives unless the Committee determines in its sole discretion to reduce or eliminate the MIP award pool based upon any objective or subjective criteria it deems appropriate.

The Committee may not increase the MIP award pool above the calculated amount.

The amount allocated for payment under the Plan and for special awards may not exceed the total approved MIP award pool.

In the discretion of the Committee, the MIP award pool may be reduced in the event the Company’s ROI is negative.

No MIP award pool will be funded in the event the Company’s Free Cash Flow for the Plan Year is negative.

A. Recommendations

At the end of each Plan Year, the Chief Executive Officer will submit to the Committee the individual award recommendations for Participants who are senior vice presidents of the Company and above, and an aggregate award amount for all other Participants.

The Committee will recommend to the independent members of the Board the amount of the award for the Chief Executive Officer and any other employee-director.

B. Granting of Awards

The Committee, in its sole discretion, may approve, revise or disapprove any recommended award to a senior vice president of the Company or above. Any award to the Chief Executive Officer or any other employee-director will be subject to approval by the independent members of the Board of Directors of the Company.

Participants each have an MIP target award expressed as a percentage of the midpoint of a defined salary range based on position level as set forth on the attached Appendix B. Individual awards are based on Business or Company performance as well as individual performance.

C. Termination of Employment or Leave of Absence

A Participant whose employment terminates during a Plan Year because of death or disability, or who is retirement eligible at the time of termination, will be eligible for a pro rata target award based on the period of active employment with the Company during the Plan Year. If a Participant’s employment with the Company is terminated for any other reason prior to actual payment of an award, such award will be canceled and the Participant will have no right under the Plan to receive payment.

A Participant who is on an approved leave of absence during the Plan Year or on the date of an award payout will be eligible for a pro rata award based on the period of active employment with the Company during the Plan Year.

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The MIP award pool is allocated by the Chief Executive Officer to Business Units and Corporate Staff Organizations based upon the following:

A. Corporate Staff Organizations

Corporate staff organizations are allocated an MIP award pool equal to the performance percentage achieved by the Company as a whole.

B. Business Units

Business units are allocated an MIP award pool based 50% on Business performance and 50% on Company performance.

A. Type of Payment

MIP awards are paid in cash unless deferred by the Participant.

B. Time of Payment

Awards may be paid at such time(s) as determined by the Committee but in all events except as provided in Section IX(D), below, will be paid no later than the later of: (i) March 15 following the end of the applicable Plan Year, or (ii) two and one-half (2  ¹/2) months after the expiration of the fiscal year in which the performance period with respect to which the awards are earned has ended.

C. Payment to Beneficiaries

If a Participant dies prior to receipt of an approved award under the Plan, the award will be paid in a lump sum to the Participant’s estate.

D. Deferral of Payment

Any Participant who has a position level of 18 or higher who has elected to participate in the Company’s Deferred Compensation Savings Plan (“DCSP”) may elect to defer payment, not to exceed 85%, of any award under this Plan by filing an irrevocable Election to Defer Payment under the DCSP by the last business day in December of the year prior to the year in which such award would be earned. Awards or portions elected to be deferred will be credited with investment earnings or losses in accordance with provisions of, and the Participant’s elections under, the DCSP. MIP awards that are deferred will be paid in accordance with the payment terms of the DCSP.

The Committee may at any time suspend, terminate, modify or amend any or all of the provisions of this Plan.

The Plan is governed by the laws of the State of New York.

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The Company has the right to make such provisions as it deems necessary or appropriate to satisfy any obligations it may have under law to withhold federal, state or local income or other taxes incurred by reason of payments pursuant to the Plan.

The Plan is intended to comply with the applicable requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and will be limited, construed and interpreted in accordance with such intent.

No award under this Plan, and no rights or interests therein, will be assignable or transferable by a Participant (or legal representative).

This Plan is effective as of January 1, 2007, and continues until terminated, suspended, modified, or amended by the Committee.

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Appendix A

2007 ROI Peer Group

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Appendix B

Management Incentive Plan (MIP)

Target Awards

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